IGI Logo

Value inch north as land comes under execution

Our view

DLF achieved strong presales of Rs90.47bn in Q3FY24 backed by the sales for new launches DLF Privana South, New Gurugram (Rs72bn); The Valley Orchard (Rs10bn); Central 67 (Rs7.1bn) with steady sales of other projects and achieved presales guidance of +Rs130bn for full year in 9MFY24. Company collected Rs25.15bn for Q3FY24. DLF plans to launch Privana’s next phases, super luxury project in DLF5, luxury project in Chennai and 1st phase of Mumbai project in next 12-15months which will have higher sales potential. Company has identified new launch pipeline of 32msf which is expected to launch over 3-4years. Non SEZ office assets are recovering fast with incremental leasing traction and now SEZ portfolio also started showing traction with occupancy of 84% (82% in Q1FY24) and DLF is under process to de-notify 1.1msf of SEZ portfolio.

We have aligned our average price realization assumption for land to the recent booking trend witnessed. We valued residential business now at Rs.183.6bn and believe DCCDL, with its 39.6msf operational portfolio and ~5.3msf under-construction projects, is on track to achieve Rs48bn NOI by FY25 hence valued DCCDL at Rs249.2bn (DLF’s share & net of debt). DLF has shown capability of monetizing its land efficiently (in last 36months, launched ~25msf and achieved ~25msf presales) thereby we expect DLF to monetize land bank with good pace too; valued at Rs621/share while we believe there is upside risk to it. DLF has surplus net cash of Rs12.46bn and is expected to maintain it. Sustained demand in residential and pick up in the leasing (incld. SEZ), net cash B/S along with DLF’s long standing track record gives us confidence. We recommend ‘NEUTRAL’ rating with TP of Rs816/share (WACC 11.5%, Office Cap Rate 8.5%, Retail Cap rate 7.25%)

Result Highlights:

Consolidated revenue for the quarter reported at Rs15,213mn (12.9% q/q & 1.8% y/y), guided by the Rs5.57bn recognition in The Camellias.

EBITDA came in at Rs5,110mn (10.5% q/q & 7.1% y/y) lower by 27% from our estimate due to product mix change. And margin reported at 33.6% (- 73bps q/q & 166bps y/y).

Consolidated Adjusted PAT reported at Rs6,566mn up by 5.4% q/q & 26.5% y/y (23% below YSECe) due to overall lower revenue recognition. PAT margin came in at 43.2% (-307bps q/q & 843bps y/y)

DLF has net cash surplus of Rs12.46bn in a quarter and at portfolio level cost of debt stood at 8.11% (8.12% for Q2FY24 exit). While company has gross debt of Rs29.5bn as of Q3FY24.

DLF has identified new launch pipeline of 32msf with sales potential of Rs790bn for next 3-4years.

KEY PRESENTATION HIGHLIGHTS

DLF:

DLF continued its sales momentum in Q3FY24 and achieved sales booking of Rs90.47bn with launch of Privana South, The Valley Orchard Panchkula and Central 67 (SCOs). 95% contribution came from the launches.

Company launched 5msf of project in Q3FY24 with the sales potential of Rs82bn. And also launch SCOs with the sales potential of Rs7.1bn.

In Q3FY24, DLF collected Rs24.25bn (6.3% q/q & 85.5% y/y) from the resi. business while Rs900mn (18.4% q/q & -1.1% y/y) was the rental collection.

DLF plans to deliver 4msf of residential projects in FY24 while should deliver Downtown Chennai 2.2msf in FY24 as well.

Currently have under-construction projects 24msf in the DLF and 5.8msf in DCCDL.

Please refer disclaimer at https://yesinvest.in/privacy_policy_disclaimers
SEBI Registration number is INZ000185632